Bank of America’s Cost-Cutting Also Cuts Customers
In 2011, Bank of America (NYSE:BAC) announced the Project New BAC campaign. As part of the program, the bank said that it would reduce its headcount by approximately 30,000 people, remove an entire layer of middle management, reduce net expenses by $5 billion through 2014, and generally undertake a massive restructuring of operations to make it more efficient and competitive, according to a company release.
“We don’t have to be the biggest company out there,” CEO Brian Moynihan said at an investor conference in 2011. “We have to be the best.” At the time, the stock was trading at about $13 per share, down from around $36 immediately before the crash. The bank lost billions as the impact of the crises rippled through the financial markets and, even now, it continues to face legal liabilities related to its mortgage business. Shares fell to nearly $5 in 2012.
But Project New BAC appears to be working. Shares have climbed more than 122 percent in the past two years, the bank has restored its fortress balance sheet, and costs are at their lowest level since 2008.